Friday, March 21, 2014

Friday Beaver - Crazy oil baron edition

Can you tell me the way to the Kremlin?

The Deal

Shell ends talks with Ukraine and ExxonMobil on extracting natural gas in the Black Sea off the coast of restive Crimea. ( In September, then president Viktor Yanukovych said Ukraine had reached a production-sharing agreement with a consortium including Shell, ExxonMobil and state-owned Nadra Ukrainy to tap gas from the Skifski site in the Black Sea. Russia plans to nationalize Crimeas gas and oil.)

In January the Shell deal was dead and the next thing you know Exxon is making a deal with Rosneft Russia's largest energy company to drill in the arctic. That deal was penned just last week as the Crimean situation was unfolding.

The Players

This now boils down to basically two men. Putin who we know is so ruthless he even had Robert Dudly (you may recall the deepwater horizon disaster in the gulf of which he was BPs head man.) was at one time headquartered in Russia and part of BPs Russian affiliate JV TNK-BP had him poisoned, burgled and threaten with arrest.

Then there's Exxon CEO Rex Tillerson who holds the same attitude as his predecessor which is to say "I'm not a U.S. company and I don't make decisions based on what's good for the U.S." He and Putin seem to be the best of friends as Putin bestowed on Tillerson Russia's order of friendship just last summer.

The Standoff

We've seen the latest sanctions being thrown around by both sides in a game of tit for tat but there is one hold card that hasn't been played, putting oil and gas sanctions on Exxon which would be a deal killer for Putin. It would of course be a blow to Exxon who's looking for future production. All the EU can do is sit and watch as the psychopaths play games with the energy supply.

Blogs of the N.W.

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